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14 06, 2024

WTI on pace to break three-week losing streak

By |2024-06-14T20:19:44+03:00June 14, 2024|Forex News, News|0 Comments


U.S. crude oil was on pace Friday to break a three-week losing streak as analysts see a tighter market heading into the third quarter.

Oil prices are up more than 3% this week as summer fuel demand is expected to reduce inventories in the coming weeks, even though the season has gotten off to a tepid start.



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14 06, 2024

Pound Sterling gears up for big week ahead

By |2024-06-14T20:08:38+03:00June 14, 2024|Forex News, News|0 Comments

  • The Pound Sterling faced rejection once again above 1.2800 against the US Dollar.
  • GBP/USD buyers look to UK inflation and BoE policy decision for fresh impetus.
  • The Pound Sterling yearns for a weekly close above 1.2800 to refuel the uptrend.

The Pound Sterling (GBP) rebounded firmly against the US Dollar (USD) this week, propelling GBP/USD to a new three-month top, but sellers once again lurked above the 1.2800 mark.

Pound Sterling struggled to stay resilient against US Dollar

Following a bullish start to the week, GBP/USD turned south in the second half of the week after failing to recapture the 1.2800 level. 

The pair extended its previous week’s decline at the start of the week on Monday, as the US Dollar stretched its robust Nonfarm Payrolls data-inspired uptrend. Further, the Greenback also capitalized on the EUR/USD sell-off, as the Euro was undermined by the Euro area political jitters after French President Emmanuel Macron announced snap elections on Sunday, dissolving parliament after exit polls showed his alliance suffered a heavy defeat in European elections to Marine Le Pen’s far-right National Rally (RN) party.

In lieu of this, GBP/USD touched a weekly low at 1.2688 on Monday. Thereafter, the Pound Sterling staged a comeback and extended the renewed upside into early Wednesday, as the US Dollar paused its uptrend ahead of the critical US Consumer Price Index (CPI) data.

The US CPI data came in softer than expected and bolstered expectations of Federal Reserve (Fed) interest rate cuts this year. Increased dovish Fed bets smashed the US Dollar alongside the US Treasury bond yields across the curve, driving GBP/USD to the highest level in three months at 1.2861.

The headline CPI was flat over the month in May, below expectations for a 0.1% gain. Core CPI rose 0.2%, which is below estimates for a 0.3% increase. The annual figures also came in softer than the market consensus.

However, the pair failed to sustain at higher levels, as sellers quickly jumped back into the game on the Fed policy announcements. Fed held policy rates steady in the range of 5.25%-5.50%, following the June policy meeting. The revised Summary of Economic Projections, the so-called dot-plot, indicated the policymakers expect to cut rates only once in 2024, against a projection of three rate cuts in the March forecasts and down from two rate cuts widely anticipated.

Fed Chair Jerome Powell delivered hawkish comments during his post-policy meeting press conference, further allowing the US Dollar buyers to recover lost ground. GBP/USD reversed sharply in the Fed aftermath and gave up the 1.2800 threshold once again.

The Fed’s signal that it is eyeing only one rate cut this year continued to fuel the US Dollar recovery momentum, exerting additional downside pressure on the Pound Sterling in the second half of the week and dragging GBP/USD to multi-week lows below 1.2700 on Friday. Markets are now pricing in about a 58% chance of a 25 basis points (bps) Fed rate cut in September, compared to a 47% probability of such a reduction seen a week ago, CME Group’s FedWatch tool showed.

Meanwhile, the UK employment data released on Tuesday failed to have any significant impact on the Pound Sterling. With all the public appearances from the Bank of England (BoE) policymakers canceled ahead of the July 4 general elections in the UK, the pair remained at the mercy of the US Dollar dynamics.

Week ahead: UK inflation and BoE decision on tap

With the US CPI data and Fed policy announcements out of the way, the focus now shifts toward the inflation report from the UK and the Bank of England (BoE) interest rate decision in the week ahead.

There are no relevant economic statistics due from both sides of the Atlantic on Monday, but China’s activity numbers could keep traders entertained.

Tuesday will feature the US Retail Sales report, followed by Industrial Production and other minor data. The UK CPI data for May will be published on Wednesday, ahead of the BoE policy verdict on Thursday. The US weekly Jobless Claims and Building Permits data will be released the same day.

On Friday, the UK Retail Sales data will drop, followed by the S&P Global Preliminary Manufacturing and Services PMI reports from the UK and the US.

Speeches from the Fed policymakers will be closely scrutinized during the week for fresh insights on the Fed’s interest rate path.

GBP/USD: Technical Outlook

As observed on the daily chart, GBP/USD continued to face rejection above the 1.2800 threshold.

Therefore, buyers yearn for a weekly candlestick close above that level for the Pound Sterling to accelerate the uptrend.

Acceptance above the latter would open the door for a test of the March 8 high of 1.2894. The next relevant resistance is seen at the 1.2950 psychological level.

The 14-day Relative Strength Index (RSI) dropped below 50 for the first time since early May, suggesting a buildup of bearish pressure. Additionally, GBP/USD made a daily close below the 21-day Simple Moving Average (SMA), currently located at 1.2744, for the first time since April 30 and dropped below the rising trendline support at 1.2725.

If GBP/USD fails to reclaim the above-mentioned levels, sell-off could be extended toward the confluence zone of the 100-day SMA and the 50-day SMA at around 1.2630.

The 200-day SMA at 1.2551 will be the last line of defense for Pound Sterling buyers.

Economic Indicator

BoE Interest Rate Decision

The Bank of England (BoE) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoE is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Pound Sterling (GBP). Likewise, if the BoE adopts a dovish view on the UK economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for GBP.

Read more.

Last release: Thu May 09, 2024 11:00

Frequency: Irregular

Actual: 5.25%

Consensus: 5.25%

Previous: 5.25%

Source: Bank of England

 

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14 06, 2024

When Is The Best Time To Buy JPY From GBP?

By |2024-06-14T18:06:27+03:00June 14, 2024|Forex News, News|0 Comments

The pound-to-Japanese Yen forecast is an indication of where technical and fundamental analysts think the GBPJPY price may be in the future. You can use these exchange rate forecasts to help you decide if now is the right time to buy Japanese Yen, or if you should wait until the price improves further.

Highlights

  • Bank of Japan struggles to overturn Japanese Yen’s persistent weakness
  • GBPJPY testing psychological 200; an upside breakout (GBP stronger) looms
  • Use GBP strength to buy more Yen

How has the Pound performed against the Japanese Yen recently?

The Japanese Yen has been stuck in a negative trend for the past few years.

One main reason the Bank of Japan’s negative interest rate policy persistently pulls JPY’s value down is that it was only in March this year that the Japanese central bank overturned its extremely accommodative monetary policy. Inflation, not deflation, was BoJ’s ultimate objective. But even this simple objective is hard to attain.

In 2022, for example, tight international crude supplies and soaring natural gas prices sent the Japanese inflation rate to a 40-year high. The peak inflation rate? Just 4.3 percent. And as soon as energy prices came down from the peak, inflation promptly dropped below 3 percent again. That’s how difficult it is to engineer sustained inflation in Japan. Until the inflation objective is reached, the BoJ simply refuses to tighten.

Source: Financial Times (paywall) 

In contrast, the Bank of England hiked the Base Rate multiple times in 2022 and 2023. Currently, the UK Base Rate is at 5.25 percent. In contrast, the Japanese policy is zero. And in the past 25 years, the highest Japanese policy rate was a meagre 0.5 percent. More importantly, the BoJ is still buying Japanese government bonds (JGBs) at the tune of $38 billion per month (6 trillion yen). That’s QE.

This monetary policy divergence is promptly reflected in the GBPJPY exchange rate. From 140 at the start of 2021, the rate gained sixty points to reach the 200 milestone. This level surpasses the 2015/6 peak (see below). With no resistance above until the 2008 peak, the path is clear for a further rally, albeit with overbought momentum.

Is it a good time to buy Japanese Yen in pounds?

Sterling has been strengthening against the Japanese Yen for some time.

Based on this ongoing long-term trend, it is perhaps not out of the norm to predict further gains for GBP.

Therefore, I would not buy all my Yen in one transaction. Perhaps a better strategy is to buy some on further JPY weakness and when the rate touches major round number levels, like 210, 220 etc.

Of course, while the outlook is negative on JPY, Yen bulls will highlight that the FX rate’s rally is near-term overbought and due for a correction. True, although a fall below 190 is needed to signal that the multi-year uptrend has paused for now.

When Is The Best Time To Buy JPY From GBP?

Will the pound get stronger against the JPY in the second half of 2024?

The Japanese Yen has weakened dramatically over the past 2-3 years. But is this trend set to continue?

If we take a 6-month view on the rate, there are a few factors worth watching. The first is that UK monetary policy may no longer be as restrictive as before. One or two rate cuts may be in the pipeline given other G7 central banks have started the easing process. This may narrow the monetary divergence between the two countries.

The second factor is that the Japanese monetary policy may no longer be that loose. No doubt, the BoJ wishes to foster a higher-inflation environment, but this stance comes at an increasing cost. In particular, the propensity for the JPY to weaken has started to unease some policymakers. The downtrend for JPY is becoming too frantic and violent.

In May, for example, the Japanese central bank acted to limit the downside. Specifically, as soon as USDJPY hit 160 – the highest level in decades – the bank bought up to $60 billion worth JPY in a matter of days to prevent a ‘one-way’ bet on the Yen.

Against this backdrop, it is possible that GBPJPY may still weaken, although the outlook is not as clear as before.

But the bottom line is this: until the BoJ starts to become more hawkish, traders generally assume the JPY will only weaken in the months ahead despite the multiple currency intervention.

What is the GBPJPY forecast in weeks, months, and years?

In light of the above-mentioned economic trends, the market consensus is that GBPJPY will stay where it is now for the time being.

A pullback is envisaged given GBPJPY’s overbought momentum. Many expect the rate to return near 190 in the next few weeks (see below).

However, these are just expectations, which can change quickly given a new set of economic data. Therefore GBPJPY may range in between 200-190 for the time being.

Source: fxstreet.com (June 2024)

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14 06, 2024

USD/JPY Forecast Today 14/6: Grinding Higher (Chart)

By |2024-06-14T16:05:31+03:00June 14, 2024|Forex News, News|0 Comments

  • The greenback continues to levitate against the Japanese yen as we head towards a Bank of Japan meeting during the early hours on Friday.
  • Ultimately, the Japanese find themselves with a massive amount of debt that they must deal with and therefore the BoJ has no real shot of raising interest rates.
  • They may try to jawbone down the US dollar against the Japanese yen, well with interest rates in the United States stubbornly high, it does make sense that we will continue to see traders choose to hang on to the US dollar, as it pays you to hang on to this position over the longer term.

Interest rate differential continues to drive currency pair

As the pair approaches the 157 yen region, it is crucial to understand that we may get a little bit of volatility right around the time that the press conference starts, but at the end of the day the Japanese have some of the highest debt load in the world and therefore cannot handle higher interest rates. The Japanese economy has started its death spiral as population shrinkage is finally catching up with the debt load that the Japanese picked up in the 1980s. Altered loose monetary policy will continue to be a major issue with the Japanese currency and all things Japanese related.

Because of this, just about any currency I can think of has gained against the Japanese yen over the course of the last couple of years, including the lowly Swiss franc. Even the Swiss franc pays interest against the Japanese yen, and now it looks like the market will be paying close attention to the ¥160.00 level where the Bank of Japan intervened several weeks ago. There is not much out there right now to keep the market from overwhelming the Japanese, and I do believe it is only a matter of time before we break through that area. Because of this, i remain long of this USD/JPY pair and will buy into any dip that we get. I have no interest in owning the Japanese yen, nor am I willing to pay the swap at the end of every trading session for the privilege.

Want to trade our daily forex analysis and predictions? Here’s a list of forex brokers in Japan to check out. 

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14 06, 2024

Euro tests 1.0700 as USD stages impressive comeback

By |2024-06-14T14:04:25+03:00June 14, 2024|Forex News, News|0 Comments

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  • EUR/USD stays under bearish pressure in the European session on Friday.
  • The technical outlook suggests that there is more room on the downside before the pair turns oversold.
  • The US Dollar could preserve its strength in case safe-haven flows dominate the action.

Following Wednesday’s upsurge, EUR/USD turned south and registered large losses on Thursday. The pair stays under pressure on Friday and trades at its lowest level since early May slightly below 1.0700.

Euro PRICE This week

The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the Swiss Franc.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   1.02% -0.02% 0.47% -0.02% -0.50% -0.47% -0.63%
EUR -1.02%   -0.68% -0.30% -0.77% -1.24% -1.23% -1.38%
GBP 0.02% 0.68%   0.50% -0.09% -0.55% -0.54% -0.69%
JPY -0.47% 0.30% -0.50%   -0.48% -1.04% -1.04% -1.04%
CAD 0.02% 0.77% 0.09% 0.48%   -0.45% -0.45% -0.61%
AUD 0.50% 1.24% 0.55% 1.04% 0.45%   0.01% -0.17%
NZD 0.47% 1.23% 0.54% 1.04% 0.45% -0.01%   -0.15%
CHF 0.63% 1.38% 0.69% 1.04% 0.61% 0.17% 0.15%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

The negative shift seen in risk mood helped the US Dollar (USD) gather strength during the American trading hours on Thursday. Additionally, the negative impact of soft inflation data on the USD started to fade away as investors reassessed the Federal Reserve’s policy outlook amid the hawkish revisions to the Summary of Economic Projections.

Meanwhile, investors’ focus shifts back to political jitters in the Eurozone following the key macroeconomic events in the US, making it difficult for the Euro to find demand. 

In the second half of the day, the US economic docket will feature the University of Michigan’s preliminary Consumer Sentiment Survey for June. Nevertheless, market participants are likely to ignore this report and stay focused on the risk perception.

At the time of press, Dow Futures were down 0.5% while S&P 500 Futures were losing 0.2%. On the other hand, Nasdaq Futures were last seen posting small daily gains. In case Wall Street’s main indexes push lower heading into the weekend, the USD is likely to continue to outperform its rivals.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly above 30, suggesting that the pair has some more room on the downside before it turns technically oversold. 1.0670 (Fibonacci 78.6% retracement of the latest uptrend) aligns as next support before 1.0600 (psychological level, static level).

In case EUR/USD manages to stabilize above 1.0700 (psychological level, static level), sellers could look to book profits ahead of the weekend and allow the pair to correct higher. In this scenario, 1.0760 (Fibonacci 50% retracement) could be seen as next resistance before 1.0790-1.0800, where the 100-day and the 200-day Simple Moving Averages are located.

Euro FAQs

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

 

  • EUR/USD stays under bearish pressure in the European session on Friday.
  • The technical outlook suggests that there is more room on the downside before the pair turns oversold.
  • The US Dollar could preserve its strength in case safe-haven flows dominate the action.

Following Wednesday’s upsurge, EUR/USD turned south and registered large losses on Thursday. The pair stays under pressure on Friday and trades at its lowest level since early May slightly below 1.0700.

Euro PRICE This week

The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the Swiss Franc.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   1.02% -0.02% 0.47% -0.02% -0.50% -0.47% -0.63%
EUR -1.02%   -0.68% -0.30% -0.77% -1.24% -1.23% -1.38%
GBP 0.02% 0.68%   0.50% -0.09% -0.55% -0.54% -0.69%
JPY -0.47% 0.30% -0.50%   -0.48% -1.04% -1.04% -1.04%
CAD 0.02% 0.77% 0.09% 0.48%   -0.45% -0.45% -0.61%
AUD 0.50% 1.24% 0.55% 1.04% 0.45%   0.01% -0.17%
NZD 0.47% 1.23% 0.54% 1.04% 0.45% -0.01%   -0.15%
CHF 0.63% 1.38% 0.69% 1.04% 0.61% 0.17% 0.15%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

The negative shift seen in risk mood helped the US Dollar (USD) gather strength during the American trading hours on Thursday. Additionally, the negative impact of soft inflation data on the USD started to fade away as investors reassessed the Federal Reserve’s policy outlook amid the hawkish revisions to the Summary of Economic Projections.

Meanwhile, investors’ focus shifts back to political jitters in the Eurozone following the key macroeconomic events in the US, making it difficult for the Euro to find demand. 

In the second half of the day, the US economic docket will feature the University of Michigan’s preliminary Consumer Sentiment Survey for June. Nevertheless, market participants are likely to ignore this report and stay focused on the risk perception.

At the time of press, Dow Futures were down 0.5% while S&P 500 Futures were losing 0.2%. On the other hand, Nasdaq Futures were last seen posting small daily gains. In case Wall Street’s main indexes push lower heading into the weekend, the USD is likely to continue to outperform its rivals.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly above 30, suggesting that the pair has some more room on the downside before it turns technically oversold. 1.0670 (Fibonacci 78.6% retracement of the latest uptrend) aligns as next support before 1.0600 (psychological level, static level).

In case EUR/USD manages to stabilize above 1.0700 (psychological level, static level), sellers could look to book profits ahead of the weekend and allow the pair to correct higher. In this scenario, 1.0760 (Fibonacci 50% retracement) could be seen as next resistance before 1.0790-1.0800, where the 100-day and the 200-day Simple Moving Averages are located.

Euro FAQs

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

 

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14 06, 2024

GBP/JPY Forecast Today 14/6: Rally Faces Resistance (Video)

By |2024-06-14T12:03:57+03:00June 14, 2024|Forex News, News|0 Comments

  • The British pound has rallied a bit against the Japanese yen, but really at this point in time, it is giving back quite a bit.
  • So, what the wait and see whether or not we can keep up the momentum.
  • It is worth noting that underneath we have the 200 yen level and that is an area that I think will continue to attract a lot of attention.

But the fact that we broke out to a fresh new high before pulling back also suggests that we are more likely than not going to see a continued move higher, even if we do get a pullback at this point.

Interest rate differential continues to be the major driver

Remember there is a major interest rate differential between the two currencies and therefore you get paid to hang on to this pair and that’s something worth paying attention to. In fact, for some currency traders, it’s the only thing worth paying attention to. The Bank of Japan does have a meeting early on Friday, and unless they do something completely unforeseen and drastic, it’s very likely that it’ll be yet just another blip on the radar on our way higher. I do think this pair continues to climb much higher because quite frankly, the Japanese have so much debt that they cannot sustain higher interest rates.

If we were to break down below the 200 yen level, then we may get a deeper correction toward the 198 yen level, but that should just offer more value. After all, we’ve broken through the area that the Bank of Japan had intervened at previously. I do anticipate a little bit of volatility going a little higher, but really at the end of the day, I do think that we go much higher, and really don’t have a target at this point. I’m just simply following the trend over the longer term, as I recognize that the Bank of Japan is essentially stuck with its monetary policy.

Ready to trade our daily forex forecast? Here are the best forex brokers in Japan to choose from. 

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14 06, 2024

GBP Retreats Vs USD As American PPI Eases

By |2024-06-14T10:02:26+03:00June 14, 2024|Forex News, News|0 Comments

At the time of writing GBP/USD was trading at $1.2762, down approximately 0.2% from Thursday’s opening rate.

The US Dollar (USD) recouped some of its recent losses on Thursday despite the latest American PPI missing forecasts.

The US PPI report unexpectedly fell by 0.2% in May on a monthly basis, missing forecasts of a 0.1% increase, after April’s 0.5% rise. Following Wednesday’s cooler-than-forecast inflation report, the data indicates that price pressures in the US are gradually easing, and moving closer to the Federal Reserve’s 2% target rate.

Ken Tjonasam, Portfolio Strategist at Global X, said that the data shows a sustained easing in pricing pressures as inflation gradually eases in the superpower economy: ‘The softer PPI figures, coupled with other recent inflation data, start to throw cold water on the Fed’s overtly cautious comments from yesterday’s FOMC meeting. These shifts suggest a more favourable path ahead, potentially accelerating discussions around easing monetary policy. In short, the data is clear: We’re on a more favourable path, with potential rate cuts becoming more likely as inflation continues to cool.’

Meanwhile, an unexpected rise in the latest US initial jobless claims further stymied the US Dollar’s upside potential, with the number of newly unemployed American citizens jumping by 13,000 to reach a total of 242,000 in the week ending 8 June. This notably surpassed market expectations of a decline to 225,000, indicating signs of easing in the US labour market.

However, the ‘greenback’ ultimately managed to rise higher against some of its major rivals, somewhat recovering from its mid-week slump.

Pound (GBP) Buoyed by Deferred BoE Rate Cut Bets

The Pound (GBP) was mostly subdued on Thursday amid a lack of fresh UK releases.

With notable data in short supply, reduced Bank of England (BoE) interest rate cut bets served to keep Sterling afloat.

foreign exchange rates

A majority of economists and investors alike now stand largely in agreement that the central bank will most likely wait until September to enact its first interest rate cut, with markets pricing in only one rate reduction for the remainder of 2024.

Yael Selfin, Chief UK economist at KPMG, said: ‘While we are seeing some tentative signs of cooling in the labour market, service sector inflation remains persistently high and it is likely the MPC would want to wait until the next set of forecasts and a few more data points before it embarks on its first rate cut.’

Analysts have also pointed out that only one set of employment data and two batches of inflation figures are due out before the central bank’s August monetary policy meeting, which will likely leave the BoE reluctant to deliver any hasty monetary loosening until later in the year. In turn, GBP may manage to keep its head above water as the week draws to a close.

Pound US Dollar Exchange Rate Forecast: US Trade Data in Focus

Looking ahead, the latest US trade data is due for release on Friday. Exports are due to have flatlined in May, retreating from a 0.5% increase in April. In addition to this, imports are due have to slowed significantly in May, rising by just 0.1%, in comparison to the previous month’s 0.9% increase. Should the data print in alignment with market projections, signs of decreased input and output may call the US economy’s resilience into question, thereby denting the ‘greenback.

Looking to the UK, a data-light end to the week could see GBP left vulnerable to global market dynamics, with any upbeat trade likely to lift the increasingly risk-sensitive Pound against its safe-haven rivals.

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14 06, 2024

Natural Gas Weekly Update

By |2024-06-14T06:09:04+03:00June 14, 2024|Forex News, News|0 Comments



Today in Energy

Recent Today in Energy analysis of natural gas markets is available on the EIA website.

Market Highlights:

(For the week ending Wednesday, June 12, 2024)

Prices

  • Henry Hub spot price: The Henry Hub spot price rose 58 cents from $2.22 per million British thermal units (MMBtu) last Wednesday to $2.80/MMBtu yesterday.

  • Henry Hub futures price: The price of the July 2024 NYMEX contract increased 28.8 cents, from $2.757/MMBtu last Wednesday to $3.045/MMBtu yesterday. Before Tuesday, when the front-month futures price settled at $3.129/MMBtu, the front-month price had not been above $3.00/MMBtu since January. The price of the 12-month strip averaging July 2024 through June 2025 futures contracts climbed 23.6 cents to $3.459/MMBtu.

  • Select regional spot prices: Natural gas spot prices rose at most locations this report week (Wednesday, June 5, to Wednesday, June 12), along with the Henry Hub. Price changes ranged from a decrease of 41 cents at FGT Citygate to an increase of 59 cents at the Waha Hub.

    • Prices in the Northeast increased this report week, despite a decrease in natural gas consumption. At the Algonquin Citygate, which serves Boston-area consumers, the price rose 22 cents from $1.55/MMBtu last Wednesday to $1.77/MMBtu yesterday. The price at Eastern Gas South in southwest Pennsylvania, near Appalachia region production activities, increased 28 cents from $1.37/MMBtu last Wednesday to $1.65/MMBtu yesterday. Natural gas consumption in the Northeast decreased 4% (0.6 billion cubic feet per day [Bcf/d]), according to data from S&P Global Commodity Insights. The decrease in total consumption was led by a decline in natural gas consumption in the electric power sector, which decreased by 9% (0.4 Bcf/d) in the Appalachia region. Temperatures in the Pittsburgh Area averaged 66°F this report week, 1°F lower than last week, resulting in 15 cooling degree days (CDD), 11 fewer CDDs than last week and 14 fewer than normal. The moderate temperatures also resulted in 8 heating degree days (HDD), 1 fewer HDD than normal and 5 fewer than last week.

    • In the Southeast, at FGT Citygate, which delivers natural gas into Florida, the price fell 41 cents from $4.14/MMBtu last Wednesday to $3.73/MMBtu yesterday. Williams, operator of the Transco pipeline, announced that it has begun returning to service compressor station 60 in Jackson, Louisiana. Since May 6, the station had been undergoing maintenance, and throughput capacity was reduced by approximately 0.8 Bcf/d, restricting eastbound natural gas flows past the compressor station.

    • Price changes on the West Coast were mixed this report week, rising in Northern California and the Pacific Northwest and falling in Southern California. The price at PG&E Citygate in Northern California rose 19 cents from $1.86/MMBtu last Wednesday to $2.05/MMBtu yesterday. At Northwest Sumas on the Canada-Washington border, the main pricing point for natural gas in the Pacific Northwest, the price rose 14 cents from $1.47/MMBtu last Wednesday to $1.61/MMBtu yesterday. On June 8, Puget Sound Energy, operator of the Jackson Prairie natural gas storage facility in Lewis County, Washington, notified Northwest Pipeline that maintenance had been completed at the facility and deliveries of natural gas into storage could resume. The price at SoCal Citygate in Southern California decreased 5 cents from $1.73/MMBtu last Wednesday to $1.68/MMBtu yesterday. Temperatures in the Riverside Area, east of Los Angeles, averaged 72°F this report week, resulting in 48 CDDs, 2 more CDDs than normal and 17 more than last week.

    • The price at the Waha Hub in West Texas, which is located near Permian Basin production activities, increased 59 cents from $0.67/MMBtu last Wednesday to $1.26/MMBtu yesterday, mostly in line with the Henry Hub. The Waha Hub discount to the Henry Hub remained relatively flat from the previous report week; Waha traded $1.54 below the Henry Hub price yesterday, compared with last Wednesday when it traded $1.55 below the Henry Hub price. The Waha Hub price has been above $1.00 the last three days, reaching a weekly high of $1.37/MMBtu on Tuesday, the highest price since February.




    Daily spot prices by region are available on the EIA website.


  • International futures prices: International natural gas futures price changes were mixed this report week. According to Bloomberg Finance, L.P., weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased 1 cent to a weekly average of $11.99/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands decreased 19 cents to a weekly average of $10.81/MMBtu. In the same week last year (week ending June 14, 2023), the prices were $9.29/MMBtu in East Asia and $10.40/MMBtu at TTF.

  • Natural gas plant liquids (NGPL) prices: The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 17 cents/MMBtu, averaging $6.87/MMBtu for the week ending June 12. Ethane prices rose 6% week over week, while weekly average natural gas prices at the Houston Ship Channel increased 17%, narrowing the ethane premium to natural gas by 9%. The ethylene spot price rose 4% week over week, and the ethylene premium to ethane increased 3%. Propane prices increased 6%, while Brent crude oil prices increased 2% week over week. The propane discount to crude oil decreased 4% for the week. Normal butane prices rose 4%, isobutane prices fell 13%, and natural gasoline prices rose 2%.


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Supply and Demand




  • Supply: According to data from S&P Global Commodity Insights, the average total supply of natural gas rose by 0.1% (0.1 Bcf/d) compared with the previous report week. Dry natural gas production decreased by 0.3% (0.3 Bcf/d) to average 99.3 Bcf/d, and average net imports from Canada increased by 6.8% (0.4 Bcf/d) from last week.

  • Demand: Total U.S. consumption of natural gas rose by 1.7% (1.1 Bcf/d) compared with the previous report week, according to data from S&P Global Commodity Insights. Natural gas consumed for power generation rose by 4.5% (1.6 Bcf/d) week over week. Industrial sector consumption decreased by 0.7% (0.2 Bcf/d), and residential and commercial sector consumption declined by 3.5% (0.3 Bcf/d). Natural gas exports to Mexico increased 1.4% (0.1 Bcf/d). Natural gas deliveries to U.S. LNG export facilities (LNG pipeline receipts) averaged 12.9 Bcf/d, or 0.3 Bcf/d lower than last week.



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Liquefied Natural Gas (LNG)

  • Pipeline receipts: Average natural gas deliveries to U.S. LNG export terminals decreased 0.3 Bcf/d from last week to 12.9 Bcf/d, according to data from S&P Global Commodity Insights. Natural gas deliveries to terminals in South Louisiana decreased by 5.4% (0.4 Bcf/d) to 7.6 Bcf/d, while natural gas deliveries to terminals in South Texas increased 3.6% (0.1 Bcf/d) to 4.2 Bcf/d. Natural gas deliveries to terminals outside the Gulf Coast were essentially unchanged at 1.2 Bcf/d.

  • Vessels departing U.S. ports: Twenty-five LNG vessels (seven from Sabine Pass, five from Corpus Christi, four each from Cameron and Freeport, three from Calcasieu Pass, and one each from Cove Point and Elba Island) with a combined LNG-carrying capacity of 94 Bcf departed the United States between June 6 and June 12, according to shipping data provided by Bloomberg Finance, L.P.






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Rig Count

  • According to Baker Hughes, for the week ending Tuesday, June 4, the natural gas rig count decreased by 2 rigs from a week ago to 98 rigs. The DJ-Niobrara dropped one rig, the Marcellus dropped two rigs, and one rig was added among unidentified producing regions. The number of oil-directed rigs decreased by 4 rigs from a week ago to 492 rigs. The DJ-Niobrara added one rig, the Ardmore Woodford dropped one rig, and four rigs were dropped among unidentified producing regions. The total rig count, which includes 4 miscellaneous rigs, now stands at 594 rigs, the first time the rig count has been under 600 rigs since January 2022.

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Other Market Drivers

  • The Federal Energy Regulatory Commission (FERC) authorized the Mountain Valley Pipeline (MVP) to begin operations. MVP, a 303-mile pipeline, can move up to 2.0 Bcf/d of natural gas from Wetzel County, West Virginia, to an interconnection with Transco’s compressor station 165 in Pittsylvania County, Virginia.

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Storage

  • Net injections into storage totaled 74 Bcf for the week ending June 7, compared with the five-year (2019–2023) average net injections of 89 Bcf and last year’s net injections of 90 Bcf during the same week. Working natural gas stocks totaled 2,974 Bcf, which is 573 Bcf (24%) more than the five-year average and 364 Bcf (14%) more than last year at this time.

  • According to The Desk survey of natural gas analysts, estimates of the weekly net change to working natural gas stocks ranged from net injections of 60 Bcf to 83 Bcf, with a median estimate of 72 Bcf.

  • The average rate of injections into storage is 8% lower than the five-year average so far in the refill season (April through October). If the rate of injections into storage matched the five-year average of 9.0 Bcf/d for the remainder of the refill season, the total inventory would be 4,285 Bcf on October 31, which is 573 Bcf higher than the five-year average of 3,712 Bcf for that time of year.

More storage data and analysis can be found on the Natural Gas Storage Dashboard and the Weekly Natural Gas Storage Report.

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See also:

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Spot Prices ($/MMBtu) Thu,

06-Jun

Fri,

07-Jun

Mon,

10-Jun

Tue,

11-Jun

Wed,

12-Jun

Henry Hub


2.29

2.44

2.63

2.72

2.80

New York


1.44

1.17

1.32

1.35

1.79

Chicago


1.69

1.52

1.84

1.82

2.23

Cal. Comp. Avg.*


1.61

1.55

1.76

1.81

1.76

*Avg. of NGI’s reported prices for: Malin, PG&E Citygate, and Southern California Border Avg.
Data source: NGI’s Daily Gas Price Index



Natural gas futures prices
Natural gas liquids spot prices










U.S. natural gas supply – Gas Week: (6/6/24 – 6/12/24)

Average daily values (billion cubic feet)

this week

last week

last year

Marketed production

112.5

112.8

116.1

Dry production

99.3

99.6

102.7

Net Canada imports

5.8

5.4

5.1

LNG pipeline deliveries

0.1

0.1

0.1

Total supply

105.2

105.1

107.8

Data source: S&P Global Commodity Insights

Note: This table reflects any data revisions that may have occurred since the previous week’s posting. Liquefied natural gas (LNG) pipeline deliveries represent natural gas sendout from LNG import terminals.













U.S. natural gas consumption – Gas Week: (6/6/24 – 6/12/24)

Average daily values (billion cubic feet)

this week

last week

last year

U.S. consumption

68.6

67.5

68.3

    Power

37.8

36.1

37.0

    Industrial

21.6

21.8

21.8

    Residential/commercial

9.2

9.6

9.6

Mexico exports

7.0

6.9

6.7

Pipeline fuel use/losses

8.6

8.5

8.8

LNG pipeline receipts

12.9

13.2

11.6

Total demand

97.1

96.1

95.4

Data source: S&P Global Commodity Insights

Note: This table reflects any data revisions that may have occurred since the previous week’s posting. Liquefied natural gas (LNG) pipeline receipts represent pipeline deliveries to LNG export terminals.

Natural gas supply

Weekly natural gas rig count and average Henry Hub











Rigs



Tue, June 04, 2024

Change from

 

last week

last year

Oil rigs


492


-0.8%


-11.5%

Natural gas rigs


98


-2.0%


-27.4%

Note: Excludes any miscellaneous
rigs









Rig numbers by type



Tue, June 04, 2024

Change from

 

last week

last year

Vertical


20


0.0%


5.3%

Horizontal


531


-0.9%


-15.0%

Directional


43


-2.3%


-15.7%

Data source: Baker Hughes Company












Working gas in underground storage
Stocks
billion cubic feet (Bcf)

Region


2024-06-07


2024-05-31

change

East


603


575


28

Midwest


712


688 R


24

Mountain


224


218


6

Pacific


276


273


3

South Central


1,159


1,146


13

Total


2,974


2,900  R


74



R=Revised.

Working gas stocks were revised to reflect resubmissions of data during the five-week period from May 3, 2024, to May 31, 2024, increasing stocks by 6 Bcf to 9 Bcf for each week during this period. The reported revisions caused the stocks for May 31, 2024, to change from 2,893 Bcf to 2,900 Bcf, and working gas stocks for the week ending May 24, 2024, changed from 2,795 Bcf to 2,804 Bcf. As a result, the implied net change between the weeks ending May 31, 2024, and May 24, 2024, changed from 98 Bcf to 96 Bcf. More information about the revised working gas levels can be found at: https://ir.eia.gov/ngs/ngshistory.xls.



Data source: U.S. Energy Information Administration Form EIA-912, Weekly Underground Natural Gas Storage Report



Note: Totals may not equal sum of components because of independent rounding.


















Working gas in underground storage
Historical comparisons

Year ago

6/7/23

5-year average

2019-2023

Region

Stocks (Bcf)

% change

Stocks (Bcf)

% change

East


568


6.2


485


24.3

Midwest


624


14.1


558


27.6

Mountain


145


54.5


138


62.3

Pacific


173


59.5


232


19.0

South Central

1,102

5.2

989

17.2

Total

2,610

13.9

2,401

23.9

Data source: U.S. Energy Information Administration Form EIA-912, Weekly Underground Natural Gas Storage Report


Note: Totals may not equal sum of components because of independent rounding.
















Temperature – heating & cooling degree days (week ending Jun 06)

 

HDDs

CDDs

Region

Current total

Deviation from normal

Deviation from last year

Current total

Deviation from normal

Deviation from last year

New England

12

-16

-36

12

7

1

Middle Atlantic

7

-13

-13

21

6

6

E N Central

12

-12

4

24

0

-12

W N Central

7

-14

7

36

6

-23

South Atlantic

4

-2

1

66

6

13

E S Central

2

-3

2

62

9

-1

W S Central

0

-1

0

95

11

16

Mountain

16

-18

-11

49

11

22

Pacific

11

-13

-13

15

-1

12

United States

8

-11

-4

42

5

5


Data source: National Oceanic and Atmospheric Administration

Note: HDDs=heating degree days; CDDs=cooling degree days

   Average temperature (°F)

   7-day mean ending Jun 06, 2024

Mean Temperature (F) 7-Day Mean ending Jun 06, 2024

        Data source: National Oceanic and Atmospheric Administration

  Deviation between average and normal temperature (°F)

   7-day mean ending Jun 06, 2024

Mean Temperature Anomaly (F) 7-Day Mean ending Jun 06, 2024

        Data source: National Oceanic and Atmospheric Administration


 

Monthly U.S. dry shale natural gas production by formation is available in the Short-Term Energy Outlook.



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14 06, 2024

USD/JPY Forecast: BoJ’s JGB Tactics and US Sentiment Key to Yen’s Path

By |2024-06-14T03:59:26+03:00June 14, 2024|Forex News, News|0 Comments

Furthermore, investors should also consider the Michigan Inflation Expectations Index. On Wednesday (June 12), the FOMC revised its Core PCE inflation projection for 2024 from 2.4% to 2.6%. An upward trend in the Michigan Inflation Expectations Index could influence investor expectations of a September Fed rate cut.

Beyond the numbers, investors should monitor FOMC Member commentary. FOMC Member Austan Goolsbee is on the calendar to speak. Comments regarding inflation and the Fed rate path could move the dial.

Short-term Forecast

Near-term trends for the USD/JPY will hinge on the Bank of Japan monetary policy decision. A cut to JGB purchases could tilt monetary policy divergence toward the US dollar. However, US data and FOMC member comments will also influence buyer demand for the USD/JPY.

USD/JPY Price Action

Daily Chart

The USD/JPY remained well above the 50-day and 200-day EMAs, confirming the bullish price trends.

A USD/JPY break above 157.5 would support a move toward the 159 handle. A climb to 159 could give the bulls a run at the April 29 high of 160.209.

The Bank of Japan decision on monetary policy, US consumer sentiment, and Fed chatter require investor attention.

Conversely, a USD/JPY fall through the 156 handle could signal a drop toward the 50-day EMA. Furthermore, a break below the 50-day EMA could give the bears a run at the 151.685 support level.

The 14-day RSI at 55.71 suggests a USD/JPY rise to the April 29 high of 160.209 before entering overbought territory.

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14 06, 2024

XAU/USD accelerates south after losing the $2,300 mark

By |2024-06-14T02:06:39+03:00June 14, 2024|Forex News, News|0 Comments


XAU/USD Current price: $2,297.49

  • Softer-than-anticipated US Producer Price Index figures temporarily boosted the mood.
  • Wall Street’s poor performance reflects a sour mood, backing demand for the US Dollar.
  • XAU/USD turned bearish and aims to pierce the weekly low at $2,286.69.

After a volatile Wednesday, the US Dollar recovered the ground lost following United States (US) first-tier events, pushing higher even against the safe-haven Gold in a risk-averse environment. XAU/USD trades below $2,300 a troy ounce, trimming weekly gains.

The US Dollar turned lower mid-European morning following the release of encouraging US inflation-related data. The US Bureau of Labor Statistics (BLS) reported that the Producer Price Index (PPI)  rose 2.2% YoY in May, easing from the 2.3% increase posted in April and below expectations for a 2.5% advance. On a monthly basis, the PPI declined by 0.2%.

The optimism was short-lived as US indexes turned sharply lower after the opening, pushing the Greenback higher across financial boards. At the time being, only the Nasdaq Composite trades in the green, up a modest 0.29%. The Dow Jones Industrial Average is the worst performer, down 225 points.

The upcoming Asian session will bring the Bank of Japan’s (BoJ) monetary policy decision. Market participants speculate the central bank will probably leave interest rates unchanged, although policymakers may also announce a reduction in bond purchases.

XAU/USD short-term technical outlook

The daily chart for XAU/USD shows that the risk of a bearish breakout has increased. The pair is trading below a firmly bearish 20 Simple Moving Average (SMA), while technical indicators resumed their slides within negative levels, in line with another leg lower. The 100 and 200 SMAs keep heading higher well below the current level, although they remain too far to become relevant. The weekly low at $2,286.69 is the immediate support level.

In the near term, and according to the 4-hour chart, the bearish case is even stronger. XAU/USD accelerated south after sliding below a now flat 20 SMA. Furthermore, the 100 SMA is crossing below the 200 SMA, both far above the shorter one. Finally, technical indicators crossed their midlines into negative territory, and maintain firmly bearish slopes, reflecting persistent selling interest.

Support levels: 2,286.70 2,271.90 2,258.30

Resistance levels: 2,308.80 2,321.55 2,333.10 



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